United state of confusion

5 April 2000
More news

06 April 2000

Purchasers in the US are finding it harder to cut through all the product hype to locate the right e-procurement software. David Arminas reports from San Diego

"Get a customer, keep a customer" may be the motto of most software companies as the global business-to-business e-commerce market heats up, but the plethora of software products on offer is making IT buyers in the US cautious about quick purchases.

At the annual users' conference of US firm Lawson Software in San Diego last month, actress Whoopi Goldberg kicked off the main event with jokes about her lack of Internet knowledge and computer skills. But she was only the warm-up act.

In front of the 6,500 delegates, Dean Hager, Lawson's vice-president of e-business marketing, then demonstrated the company's web-based e-procurement software. He was received with loud applause.

During the three-day conference, Lawson showed ways of using its products more efficiently and quizzed delegates about market trends and requirements. But, while the company's senior management performed their presentations with evangelical zeal, the delegates had an air of urgency and seriousness about them.

It was a big event for a big market. America has embraced e-commerce like no other country and surveys show that the e-commerce market, business-to-business e-commerce in particular, is set to mushroom within the next few years.

A recent survey by US consultancy Arc Advisory Group predicted that worldwide shipments of e-procurement software, worth £152 million last year, would be worth almost £1.4 billion by the end of 2004. It also estimated that the average yearly growth rate of the market would be 55 per cent - an expansion that few software companies can afford to ignore.

As the main players gear themselves up to tap into this lucrative market with more web-enabled products, software buyers are faced with a harder challenge. The market is getting crowded and purchasing professionals are finding it more difficult to choose suitable programs.

"The e-commerce phenomenon has really transpired over the past 12 to 15 months," said John Mulchrone, Lawson's vice-president of e-procurement product development. "There is a significant number of new companies out there providing software, with around 600 in the US alone.

"Purchasing people are starting to get confused. It's hard to understand what the software is and what it will mean for your company," he added.

Often it is the middle or lower management that takes the brunt of the marketing hype, Mulchrone believes. Senior management is pressurising its subordinates to look into e-procurement, as software companies are pushing aggressively for their attention.

Jonathan Feinbaum, director of business development at Prescient Systems, a Pennsylvania-based supply chain software company, agrees with Mulchrone. Furthermore, he thinks the term "supply chain" has become a buzzword that is not completely understood by all who use it, including the software companies.

"A lot of people say they are doing total supply chain management, but what do they mean by that? They might say supply chain management when all they are really doing is warehouse management, or logistics. They may never touch supply chain forecasting, for example, which is an integral part of supply chain management," he said.

"There are a lot of immature products on the market," said Teresa Wingfield, a software business analyst. Many of them are not developed enough to be meeting the real strategic needs of companies, she added.

Novant Health, a healthcare firm based in North Carolina, is moving away from electronic data interchange and now uses Lawson software to deal with its financial services online. The company claims that its adoption of e-procurement has been held up because a lot of its suppliers are not yet online.

"The pressure has been increasing in the past six to nine months to get our procurement online," said Vicky Williams, Novant's purchasing manager. Despite concerns about security, she expects its 23 healthcare centres, which includes six hospitals, to be purchasing over the Internet.

So, it is a case of buyer beware. But it is also a case of buyer go slow because of the increased number of products, according to Lawson's Dean Hager.

"The whole e-procurement surge has caused some paralysis within the industry. People used to buy software like this," he said, snapping his fingers. "Now they stop and say, 'Hey, I've got to make a decision that's extremely strategic for the company, not just a tactical decision.' This has caused a slowdown in buying as companies are taking longer to evaluate new software."

SMapr2000

LATEST
JOBS
London (Central), London (Greater)
£50,726 rising to £55,631 p.a. (with annual increments) + £2,930 London Weighting + Pension
GPA Procurement
Reading, Berkshire
£30,000 - £37,000 p.a. + benefits
GPA Procurement
SEARCH JOBS
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates
GO TO CIPS KNOWLEDGE